Turning Export Challenges into Opportunities

By Tom Cook
President, National Renderers Association

The rendering industry is not unlike any other in that it continues to be faced with challenges and opportunities. Often the challenges are really opportunities in disguise.

Export markets for rendered products are a good example of challenges and opportunities. Exports are an important part of the North American rendering industry, providing for stronger prices and disappearance of product. The opportunities are endless if we can just overcome the challenges. Market potential can only become a reality if we are able to conquer the numerous trade barriers that keep rendered products out of certain markets.

I remember with my previous employer, the National Cattlemen’s Association, working closely on trade issues and the formation of the U.S. Meat Export Federation (MEF). This was in the mid-1970s. There was a small group of cattlemen and other beef industry people who had the vision then to see great potential for beef exports.

At that time, however, there was not only a skeptical domestic industry to convince the potential of exports, but also protectionist countries that were slow to embrace imports. The harsh reality was that you couldn’t sell it if you didn’t have an open market for it.

Japan was the first challenge. Their economy was doing well and on the rise. As the Japanese people were prospering, their diets were changing. They were increasing the protein in their diet, which was no longer just rice-based. They liked meat, especially more beef.

Japanese farmers feared that imported beef would hurt them. They were politically very powerful and protectionist. The Japanese government facilitated their fears.

Before the MEF could really get into the Japanese market, the U.S. government had to negotiate various trade agreements with Japan to get the market open. Industry trade associations worked very close and hard with U.S. trade representatives to gain access to the Japanese market. There was a beef caucus in Congress along with numerous trade team exchanges between the two countries. There was a lot of activity going on in an attempt to open the Japanese market for U.S. beef.

The U.S. Special Trade Representative journeyed to Japan in the late 1970s to negotiate what would be the first of several trade agreements to expand that market for U.S. beef. On his return, he was applauded for increasing exports by 10,000 metric tons. This was considered a major win.

During the next decade, U.S. government negotiators were able to remove the quantitative quota restrictions altogether and exports to Japan soared to 513,174 metric tons by 2001 for a value of $1.6 billion. Unfortunately, bovine spongiform encephalopathy caused the export market to drop dramatically in 2004. However, through more negotiations, the Japanese market is rebuilding.

Overall, U.S. beef exports have grown significantly since the meager beginning of a 10,000 metric ton agreement. In 2011, exports to all countries were 922,580 metric tons for a value of $4.7 billion.

The reason for this story is to emphasize that export markets do not come easily, whether it is for beef or rendered products, but the rewards are there. It takes time and a whole lot of patience since exporting is far more complicated than it needs to be. There are few, if any, foreign markets opened without extensive negotiations on everything from quotas, licensing, feed ingredient, and health requirements, just to name a few.

The National Renderers Association (NRA) is on the front lines every day working to knock down trade barriers to keep existing markets or to facilitate trade to potential markets. We’ve had our successes as well as our frustrations. We’ve also failed to toot our horn when some members express frustration that they are not getting their money’s worth.

For instance, last year NRA was instrumental in working directly with Mexican importer Bachoco to re-establish exports of porcine meal to Mexico, and was directly involved in efforts to open the European Union (EU) market for U.S. tallow for biodiesel production. NRA also worked with U.S. government officials to establish import requirements for porcine, poultry, and feather meals to Chile, Colombia, and Peru, along with establishing trade contacts in those countries as well as Ecuador.

NRA is also pursuing market access to the EU to allow U.S. tallow to be used by the oleochemical industry. Our Hong Kong office has assisted International Market Development Committee (IMDC) member companies in the registration process with the China Ministry of Agriculture. Most recently, NRA has worked closely with Chinese officials to be able to export tallow to that market. On that note, congratulations to our Canadian members on their successful government-to-government negotiations for the Chinese tallow market.

U.S. government officials have been negotiating with their counterparts to open the Chinese market for U.S. tallow as well. The U.S. Department of Agriculture and the NRA have hosted official Chinese delegations during the past year in anticipation of an agreement. We hope the United States won’t be too far behind Canada in getting access to China.

The IMDC is the engine within the NRA that supports all export activities. Its goal is to promote global trade and acceptance of products produced by the rendering industry. NRA members can join the IMDC by providing extra funding to support its programs. To learn more, contact Kent Swisher, vice president for NRA International Programs, at kswisher@nationalrenderers.com.

For many years, the IMDC program was able to focus primarily on marketing and promotion. However, for the past 10 to 15 years, access has been a significant part of the program.

We will continue to meet the challenges in order to benefit from the opportunities.